Oil Industry Update

A friend sent me copies of newsletter updates from the oil industry. One from PFC and one from the Petroleum Transportation and Storage Association (PTSA) which amazingly doesn't seem to have a website. One was from Wed, the other Thursday, I've summarized them below. Note that b/d stands for barrels per day and is sometimes prefaced with k for thousand or m for million. The industry thinks in terms of crude supply, refining, and distribution.

The US uses 20 mb/d. The Strategic Petroleum Reserve (SPR) is 727 mb and the Federal Government is trying to expand it to 1 billion barrels. Estimates are 1.4 mb/d will be lost in September, which will greatly affect the east coast. Power is the number one problem, without it refineries and pipelines don't work.

As of Thursday 1.3 mb/d/day of crude production is shutdown, this is about 95% of the region's normal output. Crude production in the Gulf expected to bounce back quickly. It was 100 kb/d higher Wed than Tue. Expect almost all production will be back on line in 2-3 weeks. The production loss for the month of September is estimated at 450 kb/d.Apparently companies have high inventories of crude so the SPR release "is of little help." Also, much of the SPR is stored in the area and would be accessible if there was power

As of Wed 2.2 mb/d of refining production are shutdown. LA has 1,900 kb/d down out of 2,760 kb/d capacity. MI has 323 kb/d down out of 354 kb/d capacity. AL has all of their 110 kb/d capcity working. These shutdowns represent 10% of total US refining capacity. It's expected that 750 kb/d will remain down for several weeks or maybe months due to severe water damage at the refineries.

The Capline pipeline distributes 1 mb/d from LA to the Mid-Continent, it's down. The Colonial pipeline goes from Houston to NY and as of Thu was at 60% Plantation is more than 3,100 miles of pipeline from refineries in LA and MI to the Southeast, it was down due to power. The Louisiana Offshore Oil Port (LOOP) is where 1mb/d of crude is imported into the US. It was not damaged but is at reduced capacity due to power. Full operation requires full power which might take several weeks. Partial operations are being restored with the use of portable generators.

Various laws were relaxed through Sept 15th. This coincides with when normal changes from summer to winter ocur. The EPA relaxed some polution controls, mostly normalizing them for all 50 states so refineries don't have to make different batches. At first not all the states cooperated but I think they followed through. The IRS needed to make some changes too since tax breaks for various pollution levels needed to be relaxed as well. This was expected to happen on Fri. The DOT relaxed rules that restricted how many hours drivers could drive.